421. Purchase by unquoted trading company of own shares.

A payment made by a company1 on the redemption, repayment or purchase of its own shares is not a distribution2 for the purposes of the Corporation Tax Acts3 if the company is an unquoted4 trading company5 or the unquoted holding company6 of a trading group7 and either Condition A or Condition B is met8.

Condition A is that:

  1.  

    (1)     the redemption, repayment or purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company or by any of its 75% subsidiaries9;

  2.  

    (2)     the redemption, repayment or purchase does not form part of a